What's in store for FedEx as the post-Smith era begins?

FedEx heads into a new era as founder, Chief Executive Officer and Chairman Frederick Smith will step down from his position after 50 years, effective June 1 — and that era will likely be marked by a greater focus on digital transformation and e-commerce. Raj Subramaniam, president and chief operating officer at the company, will be internally promoted as president and CEO. Following his departure as chairman and CEO, Smith will become executive chairman at the company and will focus on improving board governance, sustainability, innovation and public policy, according to a March 28 release. Subramaniam’s previous role as chief operating officer, created in 2017 to identify successors for Smith, will not be backfilled. [caption id="attachment_98998" align="alignright" width="284"] Fred Smith, Founder, CEO & Chairman, FedEx. (Photo/FedEx)[/caption] Smith, who revolutionized and spearheaded the express delivery industry, began FedEx operations in 1973. Since then, the company had its most profitable December earnings in history in 2021 , with total revenue for its fiscal Q3 2021, which ended Feb. 28, 2022, up 10% year over year. A new era for FedEx “Raj is putting on more of a focus on digitalization [and] e-commerce, really helping to transform FedEx and update FedEx at the same time, in a number of ways so I think that’s going to continue on,” said Cathy Roberson, president of Logistics Trends & Insight and an Air Cargo World columnist, in a recent podcast . Subramaniam, a FedEx veteran of more than 30 years, was named one of Air Cargo World ’s executives to watch in 2019 . He started out as an associate marketing analyst for the company in 1991, and since then has held various positions across the portfolio of operating companies, including chief of marketing and communications and president of FedEx Express Canada. After Subramaniam assumed the role of chief operating officer in March 2019, Smith put him on the path toward the CEO position with a timeline focused on FY23 and FedEx’s 50th anniversary, Smith said in his March 28 departing letter. Hand-picked by Smith, Subramaniam is expected to continue FedEx’s legacy and growth. Technology has continued to be at the forefront of FedEx’s growth, not just in attracting e-commerce players but also to streamline operations and increase efficiency, Roberson added. [caption id="attachment_98999" align="alignright" width="265"] Raj Subramaniam to become President and CEO of FedEx. (Photo/FedEx)[/caption] “In one of [last year’s] quarterly earnings, FedEx said that they were planning to invest more in operations to help compensate for the need for more workers, and I think this, as well as also investing in technologies, [will] help each of the three major business units interact more , because that’s very much needed,” Roberson said. Looking forward, the focus remains on FedEx Ground margins with the aim of lowering capital intensity and operating costs, according to an analysis this week from J.P. Morgan. The analysis noted that five years ago, a new chief financial officer of Ground was “expected to leverage technology and optimize asset utilization, but the results were underwhelming in large part because of the significant volume growth.” This month, the integrator will also complete the final phase of its integration with TNT Express, which FedEx acquired in 2016. “One of the main reasons why we bought TNT was the ability to hook up our unparalleled air system with the terrific ground system that they had in place not only in Europe but also in the Middle East, South America and Asia,” Subramaniam told Air Cargo World in 2019. A credible Ground margin improvement program, along with a smooth integration with FedEx’s TNT Express acquisition to move volumes seamlessly between air and ground, are expected at the next Investor Day, June 28 to June 29, J.P. Morgan reported. An overview of operations FedEx’s fleet consists of 697 aircraft with additional orders on the way, according to the company’s FY22 statistical book. FedEx’s fleet consists of jets and turboprops, including 747-400Fs, MD-11Fs, 777Fs, A300Fs and more. With capacity issues and elevated demand, FedEx has continued to bolster operations throughout the past year, strengthening its global markets. For instance, in October 2021 FedEx launched direct connectivity between Paris (CDG) and Japan (KIX) to provide additional, much-needed capacity to Asia-Pacific markets and meet the surging e-commerce demand . From KIX the flight connects to Guangzhou (CAN) in China. The express operator also launched a flight connecting CDG to CAN via Singapore (SIN), adding an additional 110,000 pounds of capacity per week. FedEx was ranked No. 1 in Air Cargo World ’s Freight 50 ranking of the world’s top carriers, based on 2020 tonnage. The Air Cargo Tech Summit, the new airfreight logistics event presented by Air Cargo World , will take place live in Miami from June 6-7. Learn more and register here.

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